1. BACKGROUND

Butwal Power Company Limited (BPC) was established in 1966 as a private utility to supply electricity to a newly industrializing town in Western Nepal. At present, the Company owns and operates two hydropower plants with a total capacity of 17 MW and supplies electricity to about 21,000 predominantly rural consumers in Western Nepal. It supplies the excess energy to the national utility, Nepal Electricity Authority (NEA).

Since its establishment, BPC’s mission has been to generate and distribute electricity in the most effective and efficient manner. BPC quickly realized that distributing electricity in the rural hills of Nepal was very different from supplying electricity to urban areas. High cost of the distribution network to cater to dispersed and small loads was economically unviable. This challenge will be discussed further in the next chapter.

In the late 1980s, BPC built the 5.1 MW Andhi Khola Hydropower Project in Syangja District. As a part of this project, BPC also undertook to develop appropriate technologies as well as suitable methods and tariffs for rural electrification in the districts close to the power plant. This initiated the development and uses of various innovations in rural electrification that is the subject of this paper. The ultimate aim was to “establish a replicable model for equitable and sustainable rural electrification”.

The first phase of the rural electrification activities in the Andhi Khola Hydel and Rural Electrification Project (AHREP) was funded through grant assistance from the Norwegian Government. Based on the success during this phase, BPC received a grant from the United States Agency for International Development (USAID) in 1995 for rural electrification expansion in the area. In addition BPC has invested its own resources. Each year, BPC allocates a percentage of its operational surplus for rural electrification.

Source	Amount		Percentage
	NRs	US$*
BPC	137,814,000	2,297,000	68%
USAID Grant	34,722,00	579,000	17%
NORAD Grant	31,583,000	526,0000	15%
TOTAL	204,119,000	3,402,000	100%

A breakdown of the total investment made by BPC in rural electrification during the last 10 years is as follows.

2. CHALLENGES OF RURAL ELECTRIFICATION IN NEPAL

Electricity is widely considered as an important ingredient for socio-economic development. In the rural hilly areas of Nepal, fuel wood is the major source of energy. These areas have experienced widespread deforestation, which has led to environmental problems of soil erosion and drying up of water springs. The inhabitants have very little disposable income. Furthermore, the terrain is rugged and houses are widely dispersed. Bringing electricity to these villages poses Herculean challenges in terms of effort and financial resources. Furthermore, just bringing electricity poles and lines to a village does not automatically result in the economic revolution that a lot of us imagine it would. Putting electricity within the economic reach of the population and promoting productive end-uses of electricity is as challenging. BPC’s innovations in rural electrification aim to address some of these issues.

3. INNOVATIONS IN RURAL ELECTRIFICATION

A number of technological and managerial innovations were tried out at AHREP. In this paper, four of the major innovations will be highlighted. The two major technological innovations were the intermediate 1 kV distribution voltage and demand based tariffs. The two major managerial innovations were the Electricity Users’ Organization and Motivators.

3.1 Technological Innovations – Distribution Voltage of 1 kV

In urban areas, electricity is distributed at either 400 V or 11 kV. Beyond about a kilometer range, 400 V lines have excessive voltage drop. 11 kV lines present practical problems to supply the low but highly dispersed loads in the rugged hilly rural terrain. Keeping this in mind, a 1 kV system was used where many line accessories for 400 V lines were used. This extended the service distance from about 1 km to about 5 km. Furthermore, a 1 kV system discouraged theft of electricity because tapping these lines did not give consumers a usable voltage. However, one of the most significant advantages of the 1 kV system was that 1/0.23 kV, 1 kVA and 2 kVA transformers were relatively inexpensive and light enough to be carried by porters into even remote service areas. In comparison, even the smallest 11 kV transformers are quite heavy and small sized transformers in this voltage are comparatively expensive.

3.2 Use of Demand Based Tariff

In rural areas in Nepal, the electricity consumption is very low. Therefore, using an energy based tariff structure does not yield high revenue. On the other hand, the operational costs associated with meters, meter reading, account keeping and collecting are high, and may at times be higher than the revenue generated. A tariff structure based on subscribed demand (power) does away with meter reading and the associated complicated tasks of account keeping. Furthermore, in rural areas, strictly limiting demand is essential for reducing the cost of distribution lines. Furthermore, if the distribution is from a run-of-river plant without an access to the grid (as in micro-hydro applications), power is more valuable than energy.

3.3 Managerial Innovations

Electricity Users’ Organizations (UOs). As mentioned above, building rural electrification networks is expensive. Operating these networks is also very labor intensive. Carrying out simple routine maintenance and collecting dues, which are simple matters in urban and roadside settlements, present difficulties for remote and dispersed locations. Technicians have to travel for hours to carry out a simple task that can be completed in minutes. Collecting dues from farmers who are often away from home in their fields during the day may take many days’ work for an outsider. The UOs, established by BPC, mobilize local resources for construction of lines in the form of labor and local materials. During maintenance, these UOs carry out simple maintenance of the system and collect dues and deposit them in the company offices. For their contribution to the operation of the network, 10% of the fees collected are refunded to the UO. The UO uses this fund to pay a serviceman to carry out the tasks. In addition to reducing the cost of constructing and operating the network, the UOs help channelize the social capital in the villages and instill a sense of ownership the distribution system among the consumers.

Motivators. Motivators are local youths who have been trained to familiarize rural consumers with various aspects of electrification such as safety, end use promotion, tariff etc. In many villages, there are people who have never experienced electric lighting before, let alone other uses of electricity. Concepts and devices we take for granted are novelties for many in rural areas. Therefore, consumers have to be educated about productive uses of electricity, the relevant tariff rates, safety, connection procedures etc. Local youths, preferably local married couple, are hired so that the locals feel free to talk to someone from their neighborhood, and share their own ideas, feelings and frustrations, rather than listening passively to some outside expert. Various methods like drama, presentations, house visits, demonstrations are used as motivation tools.

4. BPC’S RURAL ELECTRIFICATION EFFORTS

At present BPC has 20,766 consumers. The breakdown of the consumers is as follows.

Concumer Category	Number of Consumers
Metered	5,227
Cutout (Demand based)	15,319
Industrial	220
TOTAL	20,766

The total number of consumers served by 1 kV system is 12,668. There is a total of about 277 km of 1 kV lines. Distribution transformers of 100, 200 or 250 kVA step down the voltage from 33 kV to 1 kV. 1 kV lines are then taken to load centers, which may be anything from a small sized bazaar to a cluster of a few houses. Then single-phase transformers of 1 or 2 kVA, or three phase transformers of 5, 10 or 25 kVA further step down the voltage to 230 V. The details of the transformers are given below.

Transformer Specification	Number
33/1 kV, 100 kVA	8
33/1 kV, 200 kVA	3
33/1 kV, 250 kVA	2
1/0.23 kV, 1 kVA	148
Transformer Specification	Number
1/0.23 kV, 2 kVA	167
1/0.4 kV, 5 kVA	38
1/0.4 kV, 10 kVA	76
1/0.4 kV, 25 kVA	43

The cutout consumers subscribe for demands from 25 watts to 400 watts. The breakdown of the cutout consumers is as follows.

Watts	Number of Consumers
25	125
50	1,454
100	6,605
250	6,057
400	1,053
800	18
TOTAL	15,319

A total of 11,881 consumers are served through 55 UOs in the BPC distribution system. The average size of a UO is 216 households (consumers). However sizes range from 36 to 380 consumers. There are typically 3 to 6 UOs supplied from a distribution transformer.

5. EXPERIENCES WITH THE INNOVATIONS

5.1 Distribution Voltage of 1 kV

The 1 kV lines usually consist of ACSR conductors strung on tubular steel or wooden poles using porcelain shackle insulators used in 400 V lines. However, self-supporting insulated aluminum cables have also been used. These lines emanate at the 33/1 kV distribution transformer and end in the 1/0.23 kV transformers at load centers. The transformers were previously protected on the 1 kV side using 400 V MCCBs, which are tested for up to 1 kV voltage. However, they were prone to frequent insulation failure both between phases and to earth.

Nowadays, either HRC or kit-kat fuses are used. A bigger distance is maintained between phases, and fuses are installed on a fiberglass plate to strengthen the insulation to earth. As discussed above, one of the advantages of the 1 kV system over the 11 kV system is that the 1 kV transformers can be built to small sizes. BPC uses 1, 2, 5, 10 and 25 kVA transformers depending on accessibility and load size. These transformers are lightweight and thus easy to transport. For a number of years, these transformers were dry-type. However, during the monsoon, they frequently failed because of moisture and lightning strikes. Based on this experience, most of these transformers have now been immersed in oil by fitting an outer tank. This has strengthened the insulation of the transformer, resulting in a drastic reduction in failure.

In many areas, there has been pressure to extend the 1 kV lines beyond 5 km resulting in excessive voltage drops. Furthermore, because of a massive road building drive by local governments and communities in the past few years, previously inaccessible areas have become accessible. Consequently, BPC is planning to convert some of the 1 kV lines into 11 kV lines. However, this is not a failure of the 1 kV system but rather a change in the socio-geographical conditions in the distribution area, brought about by increase in population density and accessibility.

The 1 kV voltage system is still relevant where the consumers are located in small groups and are widely dispersed. It may specially be applicable in remote areas served my micro hydro power plants where 400 V lines result in excessive voltage drop.

5.2 Demand Based Tariff

When the tariff structure was introduced in the early 1990s, it was assumed that the power from the 5.1 MW Andhi Khola plant would be quickly used up for rural electrification. At the time, there did not exist a power purchase agreement (PPA) with NEA. Consequently, it was assumed that power rather than energy would be the major constraint. However, a PPA has since been signed with NEA, according to which all excess energy from the plant is supplied to NEA. Even then, the power or demand based tariff is relevant in the rural distribution areas. Because of the reduction in costs associated with metering, it has been possible to provide electricity to the lowest income group consumers at very affordable rates. Over 50% of the cutout consumers subscribe for less than 100 W. These are households that use from one to four 25 W bulbs in their houses. Thus, the demand-based tariff has been very successful in making electricity available to the consumers in the lowest income group.

The major technical challenge has been to find a reliable current controlling device for very low current levels. Presently, positive thermal coefficient devices (PTCs) are used for 25 and 50 W consumers, and German-made MCCBs for the other categories.

5.3 Electricity Users’ Organization

The three main advantages that BPC saw in forming Users’ Organizations were:

· Reduction in cost of the distribution system construction, · Reduction in BPC’s burden in administering the distribution system, and · Assistance in building social capital in the community.

BPC saw the UO as an informal community organization that assists BPC in reducing the cost of rural electrification. For the remote areas, BPC stipulated that it would deal only with Uos and not individual onsumers. Communities interested in being supplied with electricity would have to organize themselves into a UO. These UOs were entrusted with the following tasks:

· Gathering and submitting applications to BPC, · Organizing local labor and local materials contributions, · Collecting fees from consumers and depositing it with BPC, · Assuming responsibility for simple maintenance of the system within the UO area, and · Serving as a communication link between the community and BPC.

Typically, BPC receives an application for electrifying a village or a group of villages. BPC then conducts a study of the area with respect to system design and cost of the system. The findings of the study and BPC’s condition for electrification are presented to the community leaders. If the community is still interested, they are asked to organize themselves into a UO and select members for the UO Executive Committee. During construction, frequent meetings are held between BPC and the UO, while BPC supplies technical manpower and non-local materials. The UO has to supply all unskilled labor and locally available materials such as wooden poles, sand, pebbles and stones etc. In the meantime, one or two members of the UO are trained to serve as servicemen during the operation phase. The training is mostly on-the-job. The serviceman will later be responsible for collection of dues and simple maintenance and repairs within the UO area. BPC also provides the UO with a small starting capital for buying tools etc.

The ownership of the system is always with BPC. It has been BPC’s experience that there are always more areas wanting electricity than available funds would allow. Thus, BPC views community contributions as a way to reduce construction costs so that more areas could be electrified with the available budget. In addition, community contributions also allow more remote communities to enable BPC to electrify their houses at the BPC’s cost-per-consumer limit of NRs. 10 to 12 thousand (US$ 130 to 160). For the work that the UO does for BPC during operation,
BPC refunds 10% of all fees and dues collected by the UO. This is primarily used to pay the salary to the serviceman.

6. CONCLUSIONS

BPC has had about a decade of experience in implementing the innovations described above. Though a rigorous financial analysis about the savings achieved thus far has not been carried out as of yet, there is a consensus among BPC’s technical staff that the results have been promising.

The 1 kV distribution system serves 61% of the consumers through 215 km of lines and about 1.9 MVA of transformer capacity. This system seems suitable to distribute electricity up to about 5 km line distance in remote hilly areas, areas typically served by micro hydropower. The ease of transportation of lightweight transformers is seen as one of its main advantages.

The consumers subscribing to a pure demand based tariff constitutes 74% of the consumers. This type of tariff has specially benefited consumers with very low income. BPC is still experimenting with different type of current cutout devices. The success of this tariff rests on a reliable cutout device. The advantage associated with reduction in metering costs is clearly evident.

About 57% of the consumers are served by UOs. The Uos in BPC’s distribution area has sown the seed for community owned distribution systems, a concept that is being aggressively promoted by Nepal national utility, NEA.

7. LOOKING AHEAD

BPC intends to continue its study of these and other innovations in rural electrification. BPC’s vision is to aggressively expand its distribution area in the next few years. Rural electrification will continue to be a major BPC activity during this expansion. With further refinement, BPC hopes to prove that sustainability and equity can be achieved in rural electrification. Many of these innovations are relevant for distribution of power by mini and micro hydro plants in remote hilly areas as well as grid-connected community owned systems. BPC aims to disseminate these innovations to the concerned stakeholders, such that benefits of the innovations can be experienced in a much larger scale.

BIBLIOGRAPHY

1. Allen Inversin, “New Designs for Rural Electrification – Private Sector Experiences in Nepal”, NRECA, Washington, USA, 1994
2. Proposal submitted to USAID for Funding of Andhi Khola Hydel and Rural Electrification Project Phase II, BPC, Kathmandu, Nepal, 1995
3. BPC internal documents